Dalia Elsabbagh – Senior Research Assistant in the Egypt Strategy Support Program (ESSP) of the International Food Policy Research Institute (IFPRI), based in Cairo.
The COVID-19 pandemic quickly evolved from a health crisis to a large-scale global economic crisis. Like most of the world’s countries, Tunisia is facing a new unfamiliar challenge. Tunisia’s government quickly realized the critical health challenge of COVID-19 and took measures to contain the virus including imposing a full lockdown and providing new equipment to the health facilities.
Economically these measures, while necessary to contain a deadly virus, are likely to also aggravate the economic recession through sharp reductions in production and interruptions to trade and supply chains. Thus, with the almost total shutdown of economic activities aside from essential activities, indirect secondary economic and social effects now are being seen in Tunisia, affecting both the macroeconomy and households.
Our simulation based on IFPRI’s Social Accounting Matrix multiplier model for Tunisia suggests that the COVID-19 crisis is expected to lead to a 46.4% decline in Tunisia’s GDP during the 2nd quarter of 2020 (April to June). The industrial sector will be hit hardest, with output falling by 52.7%, followed closely by services (-49.0%) and agriculture (-16.2%).
Figure 1: Estimated GDP losses per 2nd quarter (in percent)
Source: COVID-19 Tunisia multiplier model
The lower impact of the crisis on the agriculture sector reflects in part the continuing need for food by the population even though agricultural markets are seeing much lower activity. However, the agri-food system, including agriculture, food processing, and affiliated services, leads to an annual GDP decline of 5.0, and 7.5 percent over the two- and three-months crisis duration simulations, respectively.
Table 1: COVID-19 impact on Tunisia’s agri-food system, percent change in annual GDP by length of crisis
| Crisis period | Total | Agriculture | Processing | Affiliated services |
| One month | -2.5 | -1.3 | -1.1 | -6.6 |
| Two months | -5.0 | -2.7 | -2.2 | -13.4 |
| Three months | -7.5 | -4.0 | -3.4 | -20.1 |
Source: COVID-19 Tunisia multiplier model
Higher-income urban households would see the largest income losses, although lower-income urban households also will experience significant reductions in their income but with a lower magnitude. At national level, households will lose on average 5.7% and 8.6% of their annual income under the two- and three-month crisis duration scenarios.
Table 2: COVID-19 impact on household income in Tunisia, percent change in employment by length of crisis
| Crisis period | National | Rural | Urban |
| One month | -2.9 | -2.6 | -2.9 |
| Two months | -5.7 | -5.2 | -5.9 |
| Three months | -8.6 | -7.8 | -8.9 |
Source: COVID-19 Tunisia multiplier model
This income loss is reflected by the employment losses increased by 8.1% and 12.2% over the two- and three-month crisis duration scenarios, respectively. Accordingly, the total number of jobs lost is estimated at 287,000 and 430,000 over the two- and three-month crisis duration scenarios.
As a policy response, social transfers of approximately 2.5 billion TND is allocated towards poorer households to reduce the adverse welfare impact of these drops in household income. Government policies to support struggling businesses will allow economic activities to revive more rapidly when the lockdown loosens. Consequently, comprehensive planning by the Government of Tunisia to re-open the economy will be critical to reduce the pandemic’s adverse impact on the country’s economy in the longer-term, reducing losses of employment and income, especially in manufacturing and retail.
We gratefully acknowledge funding for this research from the International Fund for Agricultural Development under the Agricultural Investment Data Analyzer (AIDA) project and from the CGIAR Research Program on Policies, Institutions and Markets (PIM).
